India and Japan inked a landmark security pact and pledged to bolster economic cooperation with PM Manmohan Singh wooing Japanese investors saying "sky is the limit".

India and Japan on Wednesday inked a landmark security pact and pledged to bolster economic cooperation with Prime Minister Manmohan Singh wooing Japanese investors saying "sky is the limit".

Tokyo gave its nod for a 450 billion yen ($4.5 billion) loan for a major 1468 km-long freight corridor between New Delhi and Mumbai.

But during talks Singh had with his Japanese counterpart Taro Aso, there were no encouraging signals from Tokyo on initiating nuclear commerce with New Delhi.

Singh and Aso inked the Joint Declaration on enhanced security cooperation between the two countries saying their ties were rooted in their similar perceptions of the evolving environment in the region and the world at large.

At a joint press conference with Aso, Singh made it clear that Indo-Japan economic partnership and security cooperation "are not at the cost of any third country, least of all China."

"I have explained on several occasions both in India as well as in China and abroad that I sincerely believe that there is no competition between India and China. The world offers enormous scope for both our countries to realise their development ambitions.

Aso also tried to downplay the 'China factor', saying "we do not have any assumptions as targeting a third country, including China."

Notwithstanding the NSG waiver for New Delhi, the Japanese leadership appeared non-committal on civil nuclear cooperation with India even as the two countries agreed that atomic power could play an important role as a sustainable and non-polluting source of energy in meeting the growing global demands.

The two sides "shared the view that nuclear energy can play an important role as a safe, sustainable and non-polluting source of energy in meeting the rising global energy demands," a joint statement issued at the end of the Singh-Aso talks said.

Earlier, India had said it understood the sensitivities of Japan on the nuclear issue. New Delhi, pleased with Tokyo's backing for India's case at the NSG and IAEA, said it would be ready when Tokyo thought it could join hands with it.

Japan agreed to extend a package of Official Development Assistance to India to the tune of Rs.4,555 crore. Notes to formalise the agreement for the soft loan were signed by Japanese Foreign Minister Hirofumi Nakasone and India's Ambassador to Japan Hemant Krishan Singh.

Noting that economic ties between India and Japan have taken a dramatic turn for the better, Singh said the two countries can serve as a new zone of growth to counter the economic slowdown.

Inviting Japanese investments, he said "sky is the limit".

Singh and Aso shared the view that international nuclear disarmament and non-proliferation efforts should be reinforced. They also stressed the importance of strengthening their efforts towards the shared goal of achieving a "world free of nuclear weapons."

The two Prime Ministers condemned terrorism in all its forms and manifestations, saying that it constitutes a "serious threat" to international peace and security.

Recognising that India and Japan are partners with a mutual stake in each other's progress and prosperity, the joint declaration said "a strong and prosperous India is in the interest of Japan and a strong and prosperous Japan is in the interest of India.